Wilkinson, Heatley go in Cabinet shake-up

Prime Minister John Key has reinforced his former reputation as banking's "smiling assassin", giving two of his loyal ministers just hours' notice they would be sacked to bring fresh blood into his ministry.

In a shock move yesterday, Mr Key dumped Conservation Minister Kate Wilkinson and Housing Minister Phil Heatley, handing his portfolio to reinstated minister Nick Smith with orders to bring new energy and fresh ideas to the role. Mr Key had been expected to promote Dr Smith, who was sacked last year over a letter he wrote as ACC minister supporting a claim by an old friend.

But the scope of his reshuffle came as a surprise, with Auckland Central MP Nikki Kaye, 32, promoted straight into the Cabinet and Tauranga MP Simon Bridges, 36, given full Cabinet rank.

ANDREW GORRIE/Dominion Post

PHIL HEATLEY: Dumped from Cabinet.

He called Mr Heatley only hours before the public announcement and told Ms Wilkinson in Christchurch late on Monday.

Both have said they will stay on as backbenchers and be "team players", but Mr Key said they were surprised and disappointed when told the news, though they had understood his thinking.

"They have done nothing wrong . . . They had four years to make a great contribution. They have been good ministers but I want to give others a chance."

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The Pike River report, which sparked Ms Wilkinson's resignation from the Labour portfolio last year, had nothing to do with her demotion, he said.

At the same time he signalled two of the Government's biggest headaches - housing affordability and the teachers' payroll debacle - would be top priorities this year.

In his state of the nation speech in Auckland on Friday, Mr Key is expected to round out the Government's priorities with a promise to fight unemployment and boost jobs.

He confirmed that David Carter would be nominated as Speaker, to replace Lockwood Smith, although Labour signalled yesterday it may try to frustrate Mr Carter's election next week because it was not consulted on the move.

In a sign National is rattled by the popularity of Labour's promise to build 10,000 affordable houses a year, and as property prices threaten to reignite, Mr Key said he had appointed Dr Smith to bring "his trademark energy to housing market and social housing issues".

He also appointed Social Development Minister Paula Bennett as associate housing minister.

In a parallel move, Finance Minister Bill English has provided an introduction to the annual Demographia Housing Affordability Survey, saying regulations made land artificially scarce. He said the Government could ensure an adequate supply of land for housing, if local councils failed to do so.

Meanwhile, Mr Key has stripped Craig Foss of his associate education role, with responsibility for the Novopay payroll fiasco handed to Economic Development Minister Steven Joyce.

The change signals a more aggressive response to provider Talent2, which Mr Key said was now "on notice".

It required the "grunt" of senior ministers such as Mr Joyce and Mr English to sort out the mess, he said.

"I can't have Novopay lingering on for ever."

Others to win in yesterday's reshuffle include list MP and chief whip Michael Woodhouse, who becomes a minister outside the Cabinet, and ministers Jonathan Coleman and Amy Adams, who were promoted in the rankings.

CABINET RESHUFFLE: WINNERS . . . AND LOSERS

A Cabinet purge by Prime Minister John Key has thrust 2008 entrants Nikki Kaye, Simon Bridges and Michael Woodhouse up the ranks - signalling his intention not to repeat the mistake of his predecessor, Helen Clark, by leaving rejuvenation too late.

Nikki Kaye: Rising star since breaking Labour's winning streak in Auckland Central in 2008. Close links with Young Nats and vocal supporter of gay marriage and keeping alcohol-buying age at 18. Promotion will boost her hopes in Auckland Central electorate battle with Labour's Jacinda Ardern.

Nick Smith: His stocks have been up and down over the years. Under this Government, has held ACC, environment and climate change portfolios. Dropped from the Cabinet for not declaring conflict of interest in Bronwyn Pullar's ACC case. Back with housing and conservation.

Simon Bridges: The former Crown prosecutor, who took the Tauranga seat from Winston Peters in 2008, was appointed consumer affairs and associate transport minister outside Cabinet in April. Now in the Cabinet with labour, energy and resources, and associate climate change portfolios.

Michael Woodhouse: Senior whip has been working his way up since entering Parliament in 2008. The list MP is a smooth operator with experience in ACC and health. In charge of immigration, veterans' affairs and associate transport portfolios, outside Cabinet.

Kate Wilkinson: Her days have been numbered since the royal commission report into the Pike River disaster found serious failures within the Labour Department. Quit as labour minister in November. Will now lose the conservation, food safety, and associate immigration portfolios too.

Phil Heatley: Not his first fall from grace. He stood down from his housing and fisheries portfolios in February 2010 after revelations he misused his ministerial credit card. After an auditor-general's inquiry cleared him of intentional wrongdoing, he was reinstated the next month.